By Ray LaHood and Ed Rendell
November 2, 2017
Many people believe that America’s infrastructure is No. 1. That used to be the case, but it is no more. According to the World Economic Forum, the economic competitiveness of our infrastructure was indeed number one — in 2005. Today, we are ranked ninth, behind France and the Netherlands.
There is no question that infrastructure is the backbone of our nation’s economy, competitiveness and quality of life. That truth has been underscored more recently with the devastation wrought by Hurricanes Harvey, Irma and Maria.
It is past time that America had a long-term infrastructure plan. Both as a candidate and president, Donald Trump has consistently spoken about the urgent need to rebuild and modernize our infrastructure. We agree, and we think that the best opportunity to getting this accomplished is right in front of us. Congress and the administration need a win. They can get one by reaching across the aisle and collaborating on an infrastructure plan that can be included in the tax reform proposal.
America’s roads are clogged with traffic, our trains and buses are filled to capacity, and our skies are approaching gridlock.
This has been happening all over the country — including in Texas. But then again, you probably already knew that. Fifty percent of Texas’ urban interstates are congested during peak travel times and 45 percent of the state’s major roads are in poor or mediocre condition. But were you aware that driving on mediocre roads in the Houston area costs the average driver $1,850 each year due to repairs, operating costs and delays? It’s no wonder that the American Society of Civil Engineers graded Texas’ infrastructure a C-.
Since the 1950s, our roads, bridges and transit have been funded by the users of the system through an 18.4-cent federal fuel tax. But this once reliable source of funding is no longer sufficient to meet the needs of a 21st century transportation system. While there are more cars on the road than ever before, they are also more fuel efficient, using less or no gas and generating smaller revenues for the Highway Trust Fund. Coupled with the fact that the fuel tax has not kept up with inflation and has not increased since 1993, the Highway Trust Fund is in danger of running out of money in 2020.
Think about that. The cost of everything has gone up since 1993. Imagine trying to get by today on the same salary you earned in 1993. That is the woeful state of the Highway Trust Fund. The years of kicking the can down the road must end.
This is where tying infrastructure to tax reform comes in. We are suggesting two ways to provide a long-term and sustainable solution to the Highway Trust Fund. The first is through an immediate cash infusion. An estimated $2 trillion in corporate earnings from American companies are currently stashed overseas and sheltered from U.S. taxes. Let’s bring that cash back home by incentivizing companies to repatriate these funds at a much lower tax rate than the current 35 percent corporate tax rate and directing a substantial portion of those funds to the Highway Trust Fund or an Infrastructure Bank.
While this immediate cash infusion is directed to rebuilding the nation’s infrastructure, let’s also modernize the federal fuel tax by a modest 10 cents and tie it to inflation. Ultimately, the fuel tax is likely to be phased out in several years as technology will make it possible to transition to a system based on the number of miles driven by users. This would ensure that all users of the system pay their part — including the growing number of hybrid and electric vehicles that use little or no gas. This concept is already being studied and tested in several states including Oregon and California.
Over the past 30 years, all revenue increases for the Highway Trust Fund have been included in tax or deficit reduction legislation. As former elected officials, we fully understand the difficult politics of raising revenue. But by tying infrastructure to tax reform, any increase in the fuel tax would be more than offset by the amount of a middle-class tax cut. More than 250 bipartisan members of Congress agree, which is why they recently sent a letter to the House Ways and Means Committee asking that a long-term fix for the Highway Trust Fund be included in a tax package.
It’s past time for serious action to revitalize America’s infrastructure. Congress must link tax reform and infrastructure, and provide a permanent fix to the Highway Trust Fund.
Ray LaHood is a former U.S. Transportation Secretary and Ed Rendell is a former Pennsylvania governor. Both are co-chairs of Building America’s Future.